Hormel Foods Corp. reported a 15 percent rise in third-quarter profit, which also beat the Street projections. Chairman, President and Chief Executive Officer Jeffrey Ettinger attributed the growth to strong performance by grocery products and Jennie-O Turkey Store segments as well as international business.
The meat and food products firm lifted its fiscal 2011 earnings forecast, which is within analysts' estimate range.
Third-quarter net earnings attributable to the company grew to $98.48 million from $85.37 million a year earlier. Earnings per share were $0.36, 13 percent higher than $0.32 in the prior-year quarter.
The company noted that prior year's earnings per share have been restated to give effect to the two-for-one stock split, which was effective Feb. 1, 2011.
On average, 13 analysts polled by Thomson Reuters expected earnings of $0.35 per share for the quarter. Analysts' estimates typically exclude one-time items.
Net sales for the quarter grew 10.4 percent to $1.91 billion from last year's $1.73 billion, despite flat volume, while Wall Street analysts' revenue consensus was $1.87 billion.
Segment-wise, grocery products sales rose 4.4 percent and volume grew 1 percent, with improved sales of SPAM family of products and Mexican food products of MegaMex Foods joint venture.
Refrigerated foods' sales increased 10 percent, with strong contributions from products such as pepperoni, bacon, party trays, Natural Choice deli meats and Country Crock sides, while volume dropped 1 percent.
In Jennie-O Turkey Store segment, sales grew 10.8 percent despite a 3 percent drop in volume, with increased value-added sales and improved operational and supply chain efficiencies.
Specialty foods' sales also rose 10.7 percent led by higher sales of private label canned meats and sugar, while volume remained flat.
Quarterly sales in “all other” segment, which consists primarily of Hormel Foods International, climbed 35.4 percent, driven principally by stronger exports of fresh pork and improved results by international joint ventures. Volume also grew 22 percent.
Total segment operating profit could grow only 2 percent as strong performance in grocery products, Jennie-O Turkey Store and 'all Other' units were partly offset by poor performance of refrigerated foods and specialty foods.
"Lower pork operating margins hindered our refrigerated foods segment results and our Specialty Foods segment was pressured by higher than expected raw material costs during the quarter," the company said in a statement.
